Posts Tagged ‘barclaycard’


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How many credit cards do you have?

Credit cards come in so many shapes and sizes that having one card to do everything can be difficult to achieve, so if you need to move a balance and want to keep your purchase interest to a minimum, you may need more than one card. Is it worth your while getting a low rate credit card to fix the rate even if you don’t use it? Or should you mix and match your deck?

At present, the longest term you can get on a 0% balance transfer card is 31 months with the Barclaycard Platinum ,which has a 2.99% fee to move your balance. But if you need to make a purchase, this will only give you six months at 0% interest.

Are 2 cards better than 1?

So a better choice would be to consider a separate 0% purchase card, and the longest term at that level is with the Tesco Clubcard for Purchases credit card, which gives you 18 months at 0%, plus Clubcard points wherever you shop.

Of course, there is always a chance that you will not be able to clear a balance within the offer period, and you can end up spending a lot of time moving balances from card to card. In addition, the more credit cards you apply for, the worse it can look for your credit rating. The worst of all worlds would be if you were refused a card, which can really hit your credit score.

So, an alternative if you prefer to use your time for something other than moving your balances around is to choose a low rate credit card. Unlike the 18%+ standard card rates that you will move to after you have gone past the 0% offer period, these cards have a consistently lower rate, but in most cases you will be charged interest from the off.

The Sainsbury’s Nectar Low Rate card is currently at 6.9% APR, and you will collect four Nectar points for each £1 you spend on your shopping in Sainsbury’s, and one Nectar point for any £5 you spend elsewhere.

The Tesco Clubcard Credit Card with Low Rate is at 7.8%, but offers 0% for three months on balance transfers, and 0% for three months on purchases. In addition, you will collect Tesco Clubcard points wherever you shop.

Choosing a low rate credit card means you will not be hit with such steep interest charges, and it should cost you less to pay off your debt over the longer term. But remember, the rates advertised may not be the rate you are offered, so check all of the small print before you sign up for any credit card.

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Alison is a news & research reporter for compareandsave.com.Having worked as a journalist on a number of personal finance websites; she now spends time researching and commenting on UK personal finance stories and investigating new ways to help our readers save money.For press enquiries, please visit our Media Centre page.

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Could mobile phones soon replace credit and debit cards as the preferred payment method for millions of Brits? Mobile wallets are set to grow in popularity after the first service that allows consumers to pay for goods using a mobile phone was launched in the UK in May.

How do mobile wallets work?

Mobile wallets work thanks to new technology called ‘near field communication’ (NFC) – a system of short range wireless technology. Users wanting to pay for goods using their mobile phone will need a Barclaycard and Orange account as well as an enabled handset, such as the Samsung Tocco Lite.

Users can preload their mobile phone with cash (typically up to £100) and then use a contactless payment system (nicknamed Quick Tap) to pay for goods and services up to the value of around £15.  Several retailers have already signed up to the system including Subway, Wilkinson, McDonalds, Boots, Prêt a Manger, Little Chef, Eat and the National Trust.

David Chan, chief executive of Barclaycard Consumer, said: “Having a wallet on my phone has made it much more convenient to make purchases on the move and I like that it allows me to keep track of what I’m spending as I go.”

Pippa Dunn, vice president of Orange agrees that the technology will have huge benefits.  She said: “It is going to start a revolution in the way we pay for things on the high street.”

Exclusive deals on credit cards and mobile wallets

One of the big advantages for mobile phone companies and handset providers of the mobile wallets system is that it allows them to target consumers with ‘local offers’.

When customers use their GPS-enabled mobile phones to pay for goods and services using the Quick Tap system, companies can easily target them with special offer vouchers and coupons. The system allows very careful targeting of individuals with offers based on where they shop or where they eat.

Alternatives to mobile wallets

If you’re not keen to pay for goods and services using your mobile phone, or your handset is not enabled for the Quick Tap system, there are other simple payment options that you can consider.

There are plenty of easy to get debit and credit cards available in the market currently, many of which don’t even involve a credit score. Prepaid debit and credit cards are particularly popular as they offer many of the benefits of traditional credit cards without the interest charges or credit checks. You load cash on to your prepaid card and you then use it to pay for goods or services, or to withdraw cash from an ATM.

Other easy to get credit cards include Visa and MasterCard products for applicants with a less than perfect credit history. While these cards might charge a higher interest rate than other credit cards, they will allow you to make simple purchases online or on the High Street.

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If you compare the number of 0% balance transfer cards available in the market with those available for credit building or re-building, the results are shocking. For example, on the CompareandSave.com Balance Transfer table we feature over fifteen 0% balance transfer cards. On the Credit Building card table, we feature only four cards. The contrast in choice is similar on other leading credit card comparison sites.

I find this strange. In tough economic times, a growing proportion of the population are likely to find credit builder cards the most suitable option. However, relatively few issuers offer this type of credit card. At face value, it would seem that the risks of default in this ‘near prime’ demographic are likely to be higher, therefore the sector would be less attractive to issuers.

On the other hand, credit building cards normally restrict the credit limit to a maximum of £1,500. When you compare that to the high-end cards, the exposure per card can easily be five times greater, significantly increasing the risk per card for the issuer.

Capital One and Barclaycard are the two major providers that are present in the credit building space. It is fair to say that Barclaycard features in the higher credit score end of the range, whereas Capital One cards are more accessible to a wider range of applicants. I wonder whether the other big providers may look to enter the space and provide consumers outside the ‘prime’ market with some welcome choice and innovative products. Fingers crossed.

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This week the major UK banks have been publishing their half-year results.  Royal Bank of Scotland (RBS), last but not least, published its results this morning. While the headlines have been focusing on the bank’s return to profitability, the most interesting credit card information was tucked away in Barclays’ results.

The Barclaycard division revealed a 15% drop in profits in its US credit card operation due to tighter US regulation.  The UK is facing similar tighter regulation in the UK, which comes into effect in January 2011. The details and execution will be the subject of later posts on this blog, and are covered in other articles on CompareandSave.com.

In summary, the new regulations aim to provide consumers with greater protection and transparency over charges. The aims are good. If, as Barclaycard’s US results indicate, the sector becomes less attractive to issuers as a result, will it impact on the range of credit card products and innovation we are likely to see in the future?

Early indications from the US would suggest yes, at least initially. APRs have risen, 0% ‘teaser’ periods on balance transfers and purchases have reduced in length, and issuers have rationalised the number of cards in their portfolios. During the first half of next year in the UK we may see fewer, less interesting credit card products emerging. On the other hand, we will have more information about how the various fees attached to our plastic friends actually work. A trade off that may invoke mixed reactions depending on how you currently use your credit card.

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This may be tenuous, but I suspect there is life in the old cash back cards yet. Credit card reward schemes have always provided consumers with some interesting propositions. Incentives to ensure consumers use their credit card have come in all shapes and sizes – airmiles and cash back led the way.

As the big supermarkets have entered the finance market, and rewards schemes like the Nectar card have become established, credit card issuers have followed with a range of points-based retail schemes. Early this year Barclaycard launched its Freedom rewards scheme and Egg beefed up its points programme. American Express, the flagship issuer of reward programmes, has also had some wonderful airmiles promotions running recently.

From a comparison perspective, it quickly becomes hard to compare the different rewards schemes in a meaningful way, as they work in such a variety of ways. Depending on how you decide to use a particular rewards card, it can be of greater or lesser benefit.

In these uncertain, confusing times, a simple, easy to understand reward, which can be used universally, may have appeal. The traditional cash back card would seem to fit the bill.  Issuers such as Capital One and RBS/NatWest with their World cards have been testing the water recently. Could they begin to compete with the Amex Platinum cash back card? Could cash back cards start to take on the points-based rewards cards and become king of the rewards once more?

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For consumers, perhaps one of the most useful credit card developments over the past 18 months has been the expansion of the so called ‘dual hook’ cards. These cards offer identical 0% periods on both balance transfers and purchases.

This means that you can use a single card for transferring a balance, and also for making purchases, taking advantage of the superior consumer protection provided by credit cards.

Section 75 of the Consumer Credit Act 1974 protects the purchaser using a credit card against mis-selling or defaults by the seller on purchases costing between £100 and £30,000.

A year and a half ago, Halifax and Bank of Scotland (HBOS) led the way with their ‘9/9’ card – 9 months 0% BT period and 9 months 0% period on purchases.  Last year, Sainsburys joined them with a competitive ‘10/10’ card.

The ‘dual hook’ market has become a natural battle ground for attracting customers between the established high street banks (like HBOS), supermarkets (like Sainsburys) and smaller niche players (like the AA) which are more retail focused.  This year Virgin caused a stir with its 12/12 card and this week Barclaycard have rolled out its 12/12 card – a sure sign that the dual hook market has gone mainstream. Due to the strength of the dual hook offer, they are beginning to replace the more traditional 0% purchase cards.

With 0% balance transfer periods potentially lengthening, could a 13/13 be on the cards? Probably not, as issuers will want to differentiate between their 0% balance transfer cards and their dual hook cards. Nevertheless, the recent developments in this sector of the market provide consumers with strong and flexible credit card alternatives to the more traditional cards.

About this blog

I’m Alex Acton, the CompareandSave.com author of the ‘On The Cards’ blogs about my take on the credit card market, what is happening, and how it may affect you if you wish to use a credit card.

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Update 16/07/2010:

The 0% balance transfer market is certainly hotting up fast! Today, NatWest and RBS are launching their Platinum cards with 16 month 0% balance transfer offers. These are the first 16 month deals which have been available this year.

It will be interesting to see whether the other issuers who traditionally offer cards with strong 0% BT lengths follow suit. I suspect that the battle for the balance transfers has a way to run during this hopefully long, hot summer.

Original Post

About this blog

I’m Alex Acton, the CompareandSave.com author of the ‘On The Cards’ blogs about my take on the credit card market, what is happening, and how it may affect you if you wish to use a credit card.

While England and UK sports performances this summer have been mixed, there is unexpectedly good news for anyone wishing to transfer a balance on to a new credit card. The last couple of months have seen a strong set of 0% balance transfer cards returning to the market.

If you were looking to transfer a balance to a new credit card this January, you would have had a wintry shock. Only Barclaycard offered a 15 month interest-free balance transfer period open to new customers, and by mid-March, they had reverted to a 14 month card. If you consider that last year Virgin ran their market leading 16 month 0% balance transfer card, and a number of other providers were running 15 month cards, the reduction in choice this winter was a bit bleak.

Credit card issuers were planning a reduction in zero interest balance transfer lengths this year in preparation for new legislation due to come into effect later in the year (the regulatory changes are a topic for a later blog).

However, since May, competitive pressures among issuers have led to an unexpected increase in both the 0% BT lengths available and also the number of issuers who offer them. At the time of writing, there are six cards from mainstream credit card providers who offer 0% balance transfers for 15 months.

Whether any of the issuers break ranks and move to a market leading 16 month card in the coming months is a question. A preferable alternative for some issuers may be to relax their score card criteria and accept a slightly wider range of customers. Whether we begin to see a reduction in the 0% BT lengths in the autumn will also be interesting. ‘On The Cards’ will keep you posted.

For customers wishing to transfer a balance to a new credit card this summer, the choice is certainly more attractive than it was at the beginning of the year.

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